How do I code a WMD plug-in for the Elgg framework?
You should first study and understand views in Elgg. They are like blocks in Drupal, but have a wider context, like an include file. Elgg plug-ins now have a better structure, so you better go on with the newest version.
For the client-side JavaScript part, examine the TinyMCE related views, there you can see an example showing how to replace the text editor window. Then include your PHP functions in the plug-in's main file. Any initialization functions should be called in the init() function of your plug-in.